July 1 (Bloomberg) -- Portugal Telecom SGPS SA, the country’s biggest telecommunications company, fell to the lowest intraday price in 18 years after two non-executive board members resigned without providing a reason.
The stock dropped as much as 9.6 percent to 2.42 euros in Lisbon, the biggest decline since August, and traded 7.4 percent lower at 2.48 euros at 11:38 a.m.
The resignation of Fernando Magalhaes Portella and Otavio Marques de Azevedo took place after Portugal Telecom said yesterday it held 897 million euros ($1.23 billion) in commercial paper issued by Rioforte, a holding company that belongs to Grupo Espirito Santo. Grupo Espirito Santo owns 10 percent of Portugal Telecom.
“This resignation should indicate the discomfort generated by the investment of about 900 million euros in commercial paper of Rioforte,” said Alexandra Delgado, a Lisbon-based analyst at Banco Comercial Portugues SA. “The consequences to the merger with Oi are still not clear.”
Both directors represented Oi SA, Brazil’s biggest phone carrier, on the board of Portugal Telecom, according to Delgado. Oi SA is in the process of merging with Portugal Telecom.